Section 1 - Short Title

Cases

Heckendorn v. Canada, 2005 DTC 5310, 2005 FC 802

In response to a submission that the Act was not properly enacted, Hargrave P. applied the proposition (pp. 5313 and 5314) that "'it is a matter of elementary law that when a statute appears on its face to have been duly passed by a competent legislature, the Courts must assume that all things have been rightly done in respect of its passage through the legislature, and cannot entertain any argument that there is a defect of Parliamentary procedure lying behind the Act as a matter of fact.'"

Paragraph 20(1)(c)

Subparagraph 20(1)(c)(ii)

Articles

Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Taxation of Beneficiaries Resident in Canada", Chapter 4 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.

CRA requirement that a devisee formally assume the mortgage (p. 284)

The CRA has-also taken the position that when an inter vivos trust (or estate) distributes a rental property subject to a mortgage (or hypothec in Quebec) to a beneficiary, the mortgage represents an amount payable by the beneficiary for the property, and the interest thereon is therefore deductible under subparagraph 20(l)(c)(ii), subject to the usual conditions in that paragraph, provided that the "assumption by [the beneficiary] of the hypothec loan charging the property is a condition, of the distribution." [fn 43: 2014-0537141C6]…At common law, a devisee of real property of an estate takes the property subject to the charge without any requirement that the devisee specifically assume the mortgage, in the absence of any contrary indication in a will. The CRA's requirement that the debt be formally assumed as a condition of acquiring the property appears to be a narrow interpretation of subparagraph 20(l)(c)(ii),…

Paragraph 20(1)(r)

Articles

Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Classification of Trusts for Income Tax Purposes", Chapter 2 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.

Services rendered to subsidiary (p. 116)

[P]art XI.3 imposes a refundable tax on an RCA equal to 50 percent of the amount of any contributions to the trust….The tax is refunded to the RCA (without interest) when benefits are paid from the trust at a rate equal to 50 percent of the distributed amount.

Under paragraph 20(1)(r), the employer is entitled to deduct contributions to the RCA, provided that they relate to services that are rendered by an employee or former employee. The CRA has taken the position that the deduction is not available when contributions are made in respect of services that are rendered to a person other than the contributor, such as a subsidiary, notwithstanding that the definition of an RCA contemplates that contributions may be made by a person who does not deal at arm's length with the employer. [fn 220: … 2007-025985117…2010-0388761R3]

Distributions to Canadian-resident employees from the RCA are taxed in the year in which they are received under paragraph 56(1)(x), and are subject to withholding tax under paragraph 212(1)(j),…